Exclusive Lease Clause

What is an Exclusive Use Clause?

An exclusive use clause is defined as a provision within a commercial lease agreement that prohibits a landlord from leasing to another tenant for the same business purpose as the existing tenant. Exclusive use clauses are most common in shopping centres, but can be included in any commercial lease agreement. These clauses are important to the success of many small businesses and should be carefully considered and drawn up so as to avoid a breach of contract. An effective exclusive use clause protects the tenant and future income by limiting or avoiding direct competitors in a specific vicinity be it the same site or inclusive of adjoining properties owned by the same landlord. In turn, the landlord benefits through strong sales and a more diverse mixture of tenants and services to attract potential customers to the property. Terms for breaking the exclusive use clauses often include remedies such as lease termination or a cure to the breach, or if the tenant remains profitable and wishes to stay it could result in reduced rent.

Exclusive Use Clauses: The Benefits and Risks

Exclusive use clauses are often a point of contention because landlords aim to be as specific as possible, causing a number of loopholes in the contract that allow them more freedom to choose tenants. At the same time, businesses interested in the lease should ensure the terms are broad enough to allow for growth. These agreements are often subject to exceptions for incidental sales, for example if the offending business does not offer product or service as their main source of income but more as a complimentary service. Exclusive use clauses only apply to future tenants. Previous occupants of the building are exempt from the agreement. It also does not apply to large anchor tenants who could possibly change the scope of their services to overlap. With exclusive use clauses, the details are extremely important. As a tenant, you do not want the clause to be too specific to the detriment of your own business, but you also want to avoid too many exceptions defeating the purpose of the clause leaving a wide range of possibilities to the interpretation which would be harder to defend and prove in the case of a breach. Bedrock Realty has been negotiating commercial leases for 14 years. Our team is very familiar with exclusive use clauses – we know what to look for in the wording and easily understand the legal jargon so you get the best deal. Contact Us to find out how Bedrock can help guide you with your commercial leasing, subleasing and lease renewal needs.

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What Our Clients Are Saying

I would like to take this opportunity to thank you for helping us secure our new office premises. Your professional expertise and attention to detail made finding new office space a pleasurable experience.

Your understanding of the landlord’s lease and what the landlord’s giving points were helped our firm secure very favourable lease terms. We are confident that you represented our firm’s best interest throughout the entire process.

Your knowledge of the office market saved us money! The recommendation of asking for a free rent period directly helped our firm save a significant amount of money to off-set our moving costs.

Without hesitation, I would recommend your leasing services to my clients, friends and business associates.

Robert B. Ramsay

President, Vantage Engineering Inc.

ACM Automation used John Savard’s services for our office lease renewals in 2003 & 2008. In both negotiations, we did not want to move and were concerned that our landlord would use that against us. John was able to present market comparable alternatives to the landlord so the landlord now had to compete against its competition to earn our tenancy. I strongly feel that John’s involvement created the leverage that ACM Automation required to secure ACM favourable lease terms.

In the fall of 2011, ACM Automation needed to expand our business. A simple solution presented itself as there was vacant space in our building. Expansion in our building seemed easy as we still had 2 years left on the lease that John had negotiated 3 years prior. We thought we had a solution figured out in our direct discussions with our landlord’s agent but I called my trusted real estate broker for his opinion. John advised us on the office market. It seemed to be a reasonable solution to expand in our building given the limited recoveries that we could achieve in the current Sublease market that would make a move too costly.

Trish Bingam

Owner, ACM Facility Safety

John has been my office space advisor for over 7 years now. His initial role was vital in relocating to our previous location 5 years ago.

In our most recent relocation, our company growth plans crated uncertainty over just how much more office space we would require and therefore crated a delay in our ability to make a timely decision. This delay challenged our search choices such that only a few options existed.

Our search parameters were also limited by location. Our firm’s business requires our location to be close to both City Hall and major transportation arteries such as the Memorial Drive and Deerfoot Trail. John was able to increase the set of office location options by recommending a building in the west end of downtown. I trusted johns’ knowledge of our new building’s ingress and egress of traffic. I have since discovered that John’s recommendation has saved our firm a significant amount of travel time.

John successfully navigated our limited choices and was able to successfully negotiate a very favourable lease for our firm in a location that has turned out better than I would have thought. John’s knowledge of the Landlord’s Lease revealed the giving points that provided us the comfort of a lease that would protect our firm.

Without Hesitation, I would recommend John Savard’s office leasing services to my friends and colleagues.

Greg Brown

Brown & Associates Planning Group

John has been our trusted source for the last twelve years, and our last three office locations. He is incredibly knowledgeable and helped us get a prime location that exceeded our expectations.

John takes the pain out of an office move, without a doubt I would recommend working with BedRock Realty.